Medicare is federal health insurance for people 65 and over, and for younger people with certain disabilities. It is not one program. It is four parts with different jobs, different premiums, and different gaps, and the choices you make when you first enroll follow you for years.
Part A: hospital insurance
Part A covers inpatient hospital stays, skilled nursing facility care after a qualifying hospital stay, hospice, and some home health care. Most people pay no premium for it, having earned it through payroll taxes over a working life.
It is not free to use. A deductible applies per benefit period, not per year, so two separated hospital stays in one year can mean two deductibles, and daily coinsurance kicks in on long stays. The skilled nursing benefit covers up to 100 days per benefit period, fully for the first 20, with a substantial daily copay after, and only following a qualifying inpatient hospital stay. Time spent in the hospital "under observation" does not count toward that qualification, a distinction that surprises families at exactly the wrong moment. Ask the hospital directly whether admission is inpatient or observation status.
Part B: medical insurance
Part B covers doctor visits, outpatient care, preventive services, lab tests, durable medical equipment and most of what happens outside a hospital bed. It carries a monthly premium, set federally each year and higher at upper incomes, an annual deductible, and then 20 percent coinsurance on most services.
That 20 percent has no cap in traditional Medicare. There is no out-of-pocket maximum, which is the single most important structural fact in the whole program, and the reason supplemental coverage exists.
Part C: Medicare Advantage
Part C is not extra coverage. It is an alternative delivery: private plans that replace A and B, usually bundle drug coverage, and often add dental, vision or hearing benefits, frequently at low or zero additional premium.
The trade is structural. Advantage plans use provider networks and prior authorization, so your doctors and hospitals must be in network and some services need plan approval first. In exchange, every Advantage plan has an annual out-of-pocket maximum, which traditional Medicare lacks. Neither arrangement is simply better; they distribute risk and convenience differently, and the right answer depends on your doctors, your travel, and your tolerance for network rules.
Part D: prescription drugs
Part D is drug coverage from private plans, either standalone alongside traditional Medicare or built into an Advantage plan. Plans differ in premiums and, more importantly, in formularies, the lists of covered drugs and their tiers. The same prescription list can cost very different amounts across plans, which is why comparing plans against your actual medications, not in the abstract, is the only comparison that means anything. Federal law now caps annual out-of-pocket drug costs under Part D, a recent and significant improvement.
Delaying Part D without other credible drug coverage triggers a late enrollment penalty that is added to your premium permanently. Small per month, permanent is the operative word.
The gap traditional Medicare leaves, and Medigap
Choose traditional Medicare and most people add a Medigap policy, standardized supplemental insurance that picks up deductibles and that uncapped 20 percent. The crucial detail is timing: during the six months after you first enroll in Part B, insurers must sell you any Medigap policy regardless of health. Outside that window, in most states, they can decline you or charge more for health history. Skipping Medigap at 65 and wanting it at 72 after a diagnosis may simply not be possible at an affordable price. This one-time window is the least forgiving deadline in the program.
What Medicare does not cover at all
The gaps surprise people more than the cost-sharing does. Traditional Medicare does not cover routine dental care, routine vision or eyeglasses, hearing aids, or long-term custodial care. That last exclusion is the largest financial exposure in American retirement: the ongoing help with daily living that most extended nursing home stays consist of is not a Medicare benefit at any length. Medicaid covers it for those who qualify financially, long-term care insurance covers it for those who bought it early, and everyone else pays privately.
Many Medicare Advantage plans add dental, vision and hearing benefits, which is a genuine draw. Read the limits, because these supplemental benefits often carry annual caps that cover a cleaning and an exam rather than significant work.
Enrollment, briefly
The initial window spans seven months around your 65th birthday. Working past 65 with employer coverage from a large employer lets you delay Part B without penalty, then enroll in a special period after that coverage ends. Missing enrollment without qualifying coverage brings late penalties for B and D that, like the D penalty, never expire. Annual open enrollment each fall lets you switch between Advantage plans and drug plans, and it is worth an hour every year, because plans change their formularies and networks even when you change nothing.
Choosing, in practice
The decision that matters most is traditional Medicare with a Medigap policy versus Medicare Advantage, and it turns on a few concrete questions rather than a general preference.
- Do your doctors matter more than your premium? Traditional Medicare is accepted by nearly any provider who takes Medicare, anywhere in the country. Advantage plans work through networks, and specialists you want may be outside them.
- Do you travel or live in two places? Traditional Medicare travels; most Advantage networks do not.
- Can you afford a Medigap premium every month? It buys predictability, converting an uncapped 20 percent into a known monthly cost.
- Do you have a condition needing frequent specialist care? Prior authorization requirements become a recurring administrative task under Advantage plans.
- Are you healthy now and cost-sensitive? Advantage plans often cost less monthly, with the out-of-pocket maximum as a backstop.
The asymmetry worth knowing: moving from traditional Medicare to Advantage is easy at any annual enrollment. Moving back and buying Medigap later may require medical underwriting, which can mean higher premiums or refusal. The initial choice is therefore not as reversible as it looks, and that is the strongest argument for taking the Medigap window seriously at 65 even if Advantage looks cheaper that year.
Helping someone else decide
Every state runs a State Health Insurance Assistance Program offering free, unbiased counseling from trained volunteers with no commission attached. That last part distinguishes them from the marketing calls and mailers that arrive relentlessly during open enrollment. For a first Medicare decision, an hour with a SHIP counselor and the plan comparison tool covers nearly everything an agent would tell you, without the incentive to steer.
The official plan comparison tool, which checks your specific drugs and doctors against every plan in your area, is at Medicare.gov.